Question about VAT - Umbrella Company in Netherlands

**WTFH** · 6 September 2018, 17:42

Originally posted by basilthomas8 View Post

Hello, I am new here and this is my first question in the forum. I am an Indian Citizen who want to hire an Umbrella Company in Netherlands and provide my services to a UK based company(no branches or presence in Netherlands) through them. Both companies are VAT registered. The Umbrella Company in Netherlands gave me information that they will charge VAT on the invoice they generate and the UK based company who is going to receive my services does not need to apply VAT. I have been told that the UK based company will have to file VAT returns with Netherlands Tax authorities even of there is nothing to deduct. Anyone knows what Accounting/Legalities will be applicable for the UK company in this arrangement? Will there be any additional paperwork involved with the Dutch tax authorities? (forgive any apply/deduct vat terminology that's wrong as I am not from this background! :-))

Thanks in advance,

Basil

Hi Basil, if you are working in the UK, then use a UK umbrella. Using a foreign one will be more expensive for you.

**basilthomas8** · 6 September 2018, 18:17

Originally posted by WTFH View Post

Hi Basil, if you are working in the UK, then use a UK umbrella. Using a foreign one will be more expensive for you.

Hey, Thanks a lot for the response. My situation is not very favorable as my visa ends soon and I need to stay outside UK for atleast 1 year due to restrictions.

So I need to work for an Umbrella Company outside UK(I chose Netherlands due to 30% tax rule there, paying all taxes etc) but would like to give services for my current employer.

So can you look at my situation again and advice on the VAT/Tax/Legal impact on the UK Company when they buy my services through a Netherlands based Umbrella Company.

Do you work at Oxford? I am a recent graduate from Oxford btw! (May 2018)

**BR14** · 6 September 2018, 19:00

If the work is done in the UK (even remotely) then tax and social insurance is due in the UK.
you also have to have the right to work in the UK.
(or any other EU country, at present)
I'm not convinced your model will work, sorry

**basilthomas8** · 6 September 2018, 20:18

Originally posted by BR14 View Post

If the work is done in the UK (even remotely) then tax and social insurance is due in the UK.
you also have to have the right to work in the UK.
(or any other EU country, at present)
I'm not convinced your model will work, sorry

I am told that the Umbrella Company in Netherlands can sponsor my work visa for Netherlands so will be authorized to work in Netherlands.

As for work done in the UK, its a bit vague in my case as most of the work is done on my laptop and transferred to UK servers and occasional use of infrastructure in the UK for work.

Does this all seem a bit odd? I am not making it up. Its based on the advice I received from the Dutch Umbrella Company service provider.

PS: i don't think your first statement is true. Double taxation will not happen if tax is already being deducted overseas.
See https://www.gov.uk/guidance/paying-e...working-abroad

I think the Umbrella Company thing has diverted the core question. I will rephrase it below

A UK based VAT registered company buys some Software consultancy service from a Dutch company which invoices the UK company with VAT. Does the UK company has any obligation or requirement to file any returns/refunds etc with Dutch tax authorities? This was my initial question. Umbrella Company stuff was all to give a background of the special situation. Can anyone with knowledge of cross border VAT help?

**WTFH** · 7 September 2018, 08:35

Originally posted by basilthomas8 View Post

I am told that the Umbrella Company in Netherlands can sponsor my work visa for Netherlands so will be authorized to work in Netherlands.

As for work done in the UK, its a bit vague in my case as most of the work is done on my laptop and transferred to UK servers and occasional use of infrastructure in the UK for work.

Does this all seem a bit odd? I am not making it up. Its based on the advice I received from the Dutch Umbrella Company service provider.

PS: i don't think your first statement is true. Double taxation will not happen if tax is already being deducted overseas.
See https://www.gov.uk/guidance/paying-e...working-abroad

I think the Umbrella Company thing has diverted the core question. I will rephrase it below

A UK based VAT registered company buys some Software consultancy service from a Dutch company which invoices the UK company with VAT. Does the UK company has any obligation or requirement to file any returns/refunds etc with Dutch tax authorities? This was my initial question. Umbrella Company stuff was all to give a background of the special situation. Can anyone with knowledge of cross border VAT help?

The reason you've got the answers you have is because what you are trying to do is not sensible.
Also, if the Dutch umbrella was any good, they would already know the rules regarding charging VAT and would be able to advise you on the tax you will pay as well.

Your problem is that the contract is for you to provide services to a UK company.

Now if it is illegal for you to work in the UK, then you need the UK company to agree that they will take you on as a contractor based abroad. Before you even think about what umbrella you are going to use, what country you are going to live in, where you are going to pay taxes, how VAT is calculated, etc, you need to make sure that the end client is prepared to sign a foreign contract.

Your next issue is that you think you'll get the 30% tax rule. Except that is for people who have been recruited from outside the Netherlands and brought to the Netherlands to deliver work in the Netherlands for a role where there is a skills shortage. Your contract would be to provide services to a UK company.

Your next issue is currency exchange rates and how much of a cut the Dutch umbrella company and Dutch banks will take to convert your GBP into EUR (and from there into whatever currency you are using)

Your next issue is your right to work and the impact of Brexit on that.

**basilthomas8** · 7 September 2018, 09:07

Originally posted by WTFH View Post

The reason you've got the answers you have is because what you are trying to do is not sensible.
Also, if the Dutch umbrella was any good, they would already know the rules regarding charging VAT and would be able to advise you on the tax you will pay as well.

Your problem is that the contract is for you to provide services to a UK company.

Now if it is illegal for you to work in the UK, then you need the UK company to agree that they will take you on as a contractor based abroad. Before you even think about what umbrella you are going to use, what country you are going to live in, where you are going to pay taxes, how VAT is calculated, etc, you need to make sure that the end client is prepared to sign a foreign contract.

Your next issue is that you think you'll get the 30% tax rule. Except that is for people who have been recruited from outside the Netherlands and brought to the Netherlands to deliver work in the Netherlands for a role where there is a skills shortage. Your contract would be to provide services to a UK company.

Your next issue is currency exchange rates and how much of a cut the Dutch umbrella company and Dutch banks will take to convert your GBP into EUR (and from there into whatever currency you are using)

Your next issue is your right to work and the impact of Brexit on that.

I guess may be its not so sensible and I need to look for alternatives. To clarify some of your points

- Netherlands Umbrella Company said they would issue invoice with VAT and have already given me full details of the pay that will be received and taxes that is deducted and all that. Everything clear on what will happen in Netherlands.The question is more related to how the UK client will handle the invoice.

- UK Company(end client) is prepared to sign a foreign contract(if its not complicated in terms of paperwork required,especially outside UK paperwork)

- 30% rule was advised by the Umbrella Company. I am not too concerned about it and I am willing to pay taxes if 30% rule is not applicable

- Dutch umbrella company is clear on the % fees they take each month

- If as they claim, I get a visa that allows me to work in Netherlands then I should be able to open a bank account in Netherlands. The plan is to stay in Netherlands and work. I am not too concerned about the exchange rates as that's a necessary evil when money is transferred between 2 countries. I may perhaps be able to use something like https://www.revolut.com/ to reduce the impact.

- Right to work , I think I have already explained about Dutch Umbrella Company sponsoring my work visa(or I am told so anyways). As to brexit , my 1 year period will end by that time and I can apply for a Tier 2 General Visa in 2019 if needed to come back to UK.

To clarify, the Dutch Company is fine with its VAT and Tax impact. I want to understand what the impact is or the UK Client in terms of VAT and other things in such an arrangement(if its legal). The UK Client doesn't have clear answers so far on that as some people say there needs to be a VAT return filed with Dutch tax authorities although there is nothing to charge/deduct/or whatever is the term. They consider this as unnecessary burden and may not want to go with this method in such a case.

**lucyclarityumbrella** · 7 September 2018, 11:31

Hi basilthomas8

So where will you be living? In the Netherlands?

**basilthomas8** · 7 September 2018, 12:07

Originally posted by lucycontractorumbrella View Post

Hi basilthomas8

So where will you be living? In the Netherlands?

Yes in the Netherlands. Working from there. According to the Umbrella company service provider, they can sponsor a work visa for me to legally live and work in Netherlands while providing software consultancy services to client in UK.

Even assuming that I am trying to do something fishy(although I am exploring options available)....the core question is still a valid one in my opinion(about VAT implications on the UK company for an invoice received from Dutch company which includes VAT).I am sure many UK companies buy services from dutch companies and pay invoices which includes VAT.

**lucyclarityumbrella** · 7 September 2018, 12:37

OK so all "your" personal taxes will be due in the Netherlands. As for the VAT return, I would suggest asking the umbrella to explain why the UK company would have to complete a VAT return - seems a little odd to me - however the VAT and Tax rules in the Netherlands are a rule unto their own

Question about VAT - Umbrella Company in Netherlands